Bamboo Capitalism: A Lesson Learned

As China continues to rise as a superpower, the US elite are becoming more and more concerned of its take over of the global market. The inevitability of the rise of China cannot be denied, nor can the downfall of the American empire. The quick recovery of the Chinese economy juxtaposed to the staggering US economy is only one such example.

An article in the March 12 “The Economist” certainly lays bare this fear. However it seems to have changed its tone over the last few months. In the past the “journal of elite opinion” has subtly warned China that it would not take any encroachment of its power lying down. Sometimes it even alluded to veiled threats in order to make this point.

The new direction taken by The Economist is perplexing. They’ve now taken to praising the Chinese economy, and offering advice to it. The tag line of the article is quote revealing: “China’s success owes more to its entrepreneurs than its bureaucrats. Time to bring them out of the shadows.” Of course it should come as no surprise that such a journal would praise the free market. But one needs to look at the subtext of such a statement.

First in the article it gives mere lip service to “capitalism with Chinese characteristics”, otherwise known as Keynesian economics. The spending of state money to help the economy along be the free market can’t actually do everything its claimed it can do.

“Of course, the state’s activity has been vast and important. It has been effective in eradicating physical and technological obstacles: physical, through the construction of roads, power plants and bridges; technical, by facilitating (through means fair an foul) the transfer of foreign intellectual property.”

In fewer words, it means their government policy is great, capitalism in China wouldn’t have been possible without it… Just like the Keynesian era of the United States.

The article then goes on to describe how the Chinese economy has become a place where 70% of the “GDP produced by enterprises that are not majority-owned by the state at 70%”. They endlessly tout the accomplishments of the “free market” while acknowledging that state regulation has made the economy stable and has prevented economic disasters from happening. The wording suggests that the successes are due to the “free market” not the regulation of it.

However, it is not enough to just pretend China’s strength is not due to its tight government regulation (and give it to private businesses), they go a step even further and call the state a bully:

“But this points to a third more worrying, characteristic of such businesses: their vulnerability. Chinese regulation of its private sector is often referred to as “one eye open, one eye shut”. It is a wonderful flexible system, but without a consistent rule of law, companies are prey to the predilections of bureaucrats. A crackdown could come at any time. It is also hard for them to mature into more permanent structures.”

It almost makes one laugh to hear about the poor private corporations being bullied by the mean old state regulation. I’m not sure if I want to laugh or become enraged at this hypocritical crying. As private production cripples the world, kills roughly 10 million children a year and kills the planet, we’re supposed to feel sorry for these million and billionaires.

“Many entrepreneurs understandably fear such scrutiny: they hate sticking out, lest their operations become the focus of an investigation.”

No doubt it is harmful for profits if the government gets wind of illegal practises like labour abuses. Some of these investigations have revealed the use of slave labour, even the use of mentally handicapped people as well. Not to mention the murder of union activists is rampant within China as well as environmental destruction. A common complaint we hear from capitalists all the time: “god damned human rights interfering with my profits”.

An interesting moment for me is when they come close to acknowledging the dialectical relationship between state intervention and the anarchy that is the market. Its like they almost have this epiphany:

“…over time, the contradictions between anarchic opportunism and state direction, both vital to China’s rise, will surely result in greater friction.”

In the end, the article finally articulates what its all about: the Keynesian economics, the state intervention must end in order for Chinese capitalism to take off gain true power in the world economy. They call for the “Chinese characteristics” to be removed from the capitalism. This all seems strange to me, I don’t see the American elite, who are in direct competition with Chinese capitalism, being so altruistic and willing to help their competition. Especially when one takes into consideration what is at stake here: economic control of the world.

It seems more likely to me that the US elites are trying to trick the Chinese elites into deregulating their market. Much like that kid we know from elementary school who tried to get people to fight each other. The strength of the Chinese capitalism is its state intervention. Remove this, deregulate the economy, and you get another global economic collapse. The Chinese have witnessed this and plan on avoiding it at all costs.

The plan must be to fill the heads of the entrepreneurs with all these dreams of what an unregulated market can do. “Capitalism will take off and you’ll all be rich if the state wasn’t holding you back.”

It seems more likely to me that the US powers are trying to get the Chinese economy to collapse. Not only would this save America’s spot as the top power, but this collapse of the economy would also give a price break to US companies who use Chinese labour. It’s hard to imagine Chinese labour getting any cheaper, but it could.

This plan will fail, the Chinese are not stupid or prone to flattery. They know who their enemies are. They know their strength is not capitalism, but its Chinese characteristics. They already learned the lesson the US experienced with deregulation of the economy.